Wednesday, August 10, 2016

How to shave years off your mortgage without refinancing!

Recently, I've been seeing a lot of NY Lottery advertisements.  Apparently, the jackpot is growing and folks are getting excited about it.  I admit that every once in a while I buy a ticket and start to dream about what I would do with my winnings.  I have to admit that I am a pretty boring dreamer because the first things I think of are paying of my student loans and mortgage (then I'll plan a big vacation).

Those of you who have been reading my posts for a while know that I am ALL ABOUT paying off debt.  That mortgage debt is a big one.  Paying if off feels pretty unobtainable.  Many people just barely qualified for a 30 year fixed mortgage, let alone a lesser term.  If you started that mortgage at the age of 40 or more, you are looking at being stuck with that payment until you are 70 years old.  While, that might sound fine for some, the idea of being saddled with that payment beyond the age of 60 is daunting to say the least.  So, what do you do about it?

Perhaps you should consider making one extra payment per year.  Let's look at some numbers.  If I opened a $150K  mortgage today (8/10/16) with a 30 year fixed rate of 3.40% (APR), my monthly payment would be $532.18 (this does not include the property taxes, which many of you will roll into the monthly loan payment; the property tax amount does not matter for the sake of our scenario, just know that you will have to account for that).

If I paid only the exact payment every month my loan would be paid in full on August 10, 2046.

What happens if I make one extra payment per year.  If I paid an extra $532.18 to the principal each year (on Aug. 10), that make my payoff date Dec. 10, 2042.  I know many of you are thinking that coming up with an extra $532.18 each August is going to be difficult.  What if you divided this "extra mortgage payment out over the course of the year?  You would be paying an extra $45 per month, and your loan would be paid in full by Nov. 10, 2042 (1 month earlier this way).  I don't know about you, but I could come up with $45 per month!  If I could double that, my mortgage would be done by Dec. 10, 2039.

I know these dates seem really far away, but let's look at it another way.  An extra $45/month (or 1 extra payment/year) gets my 30 year loan paid off in just over 26 years.  When I doubled it to $90/month (or 2 extra payments/year), my 30 year loan would be paid off in just over 23 years.

So, if you cannot qualify for a mortgage term that is less than 30 years, this strategy may help you save yourself a lot of years in mortgage payments (not to mention money in interest).  If you would like to see what your own numbers would look like, I like the calculators on, but really there are a lot of them online, and you can easily change the dollar amounts, interest rates, and dates to suit your needs!

Wednesday, August 3, 2016

So, your Social Security Number may have been compromised! Now what?!

I want to share a story with you.

A couple of years back, I filed my taxes.  I was very eagerly awaiting a refund, and decided to call the IRS when a couple of months had passed and I had still not received anything.  I was placed on hold several times, and finally got to speak with a real human being.

Unfortunately, the woman on the other line had bad news for me.  Apparently someone else had filed a tax return using my Social Security Number!  They "couldn't tell me" who it was, or any information about them, but they COULD tell me that both returns were under investigation, and that it would take up to 8 or 9 months for me to get this all sorted out!  I never use my tax return to budget for necessary living expenses, so I was going to be fine financially, but I was still really scared!

I had no idea how my Social Security Number (SSN) had been compromised (I never carry it), or to what degree!  If anything like this ever happens to you, here are some important steps to take:

  1. Immediately check your credit report.  Request reports from:  Experian, Transunion, and Equifax.  You get one per year for free by going to:  There are other sites, but this is the free one!  Others will typically have other services attached to them that you do not need.  Make sure there isn't anything on the credit report that isn't yours.  If there is, you can dispute it!  It takes time, but it is completely doable.  If you want your credit score (the literal number), they will charge you a fee for that (usually $7 or so per agency), but the report itself is free, and all you really need.
  2. Call at least one of the credit reporting agencies and request a "90 Day Fraud Alert."  Once you have called one agency, they will automatically notify the other two for you.  This doesn't literally freeze your credit report, but if someone tries to get credit with your Social Security Number, a note will come up on the lender's screen saying that there is a "fraud alert." 
  3. If you feel really certain that someone is actually trying to get credit using your SSN, you can request a "Credit Freeze."  This will cost you around $30, but it will literally make it impossible for someone to pull you credit report in order to apply for new credit.  This does include you!  If you do this, you will also have "unfreeze" it if you want to apply for a loan of any kind.
  4. Get the IRS to issue you a tax ID number that is NOT your social security number.  They do this automatically if you've ever had a situation like mine, but there is a process by which you could request this if you believe your SSN was compromised in a different way.
In my situation, my SSN was only compromised for tax purposes.  This person was trying to file false tax returns in order to obtain money from the government.  They did not try to get credit using my number (fortunately).  I have been using an alternate number to file my taxes each year (as issued by the IRS), and I placed a 90-Day Fraud Alert on my account.  About a year later, the IRS did give my me return, so despite the stressful situation, all ended well.

There are tons of ways that your SSN could be compromised, and hopefully this never happens to you, but if you do have an experience that makes you think your SSN is at risk, there are some steps you can take to protect yourself.